Credit Reallocation in Japan (Japanese)

This paper examines the reallocation of credit among Japanese firms during the period FY1980-FY2014. We employ the quarterly Financial Statements Statistics of Corporations by Industry and apply the job reallocation measure proposed by Davis and Haltiwanger (1992) in order to gauge the extent of credit reallocation. Our findings are as follows: (1) there is a substantial amount of credit reallocation at any phase of the business cycle, indicating that firms' financial procurement behavior is inherently quite heterogeneous; (2) credit creation is less volatile than credit destruction since it incurs larger search and screening costs as predicted by the theories on informational asymmetry and search and matching; (3) the extent of credit reallocation declined sharply in the 1990s and remained stagnant thereafter presumably due to the impaired Japanese credit market during the period; (4) overall credit reallocation is procyclical to the business cycle in Japan as a result of strong procyclicality of credit creation and relatively weak countercyclicality of credit destruction; and (5) the credit creation and reallocation among SMEs is acyclical to the business cycle, while the destruction is countercyclical, indicating that the extent of credit increase is limited among small and medium-sized enterprises (SMEs) during the boom period.